💸 PAYE – If It’s Basically Money

PAYE (Pay As You Earn) is the tax you deduct from regular wages. If a perk is “money or money’s worth,” it’s treated just like salary.

Examples:

• Cash bonuses
• Prezzy cards or open-loop gift cards

‍What to do:
These need to go through payroll. You’ll deduct PAYE and other usual deductions(like Kiwi Saver or student loan). The cost is fully deductible for your business.

🎁 FBT – Non-Cash Perks

FBT (Fringe Benefit Tax) kicks in when you give non-cash rewards - things like vouchers, company cars, or discounted loans.

Examples:

• Supermarket or petrol gift cards
• Restaurant vouchers as a thank-you
• Personal use of a work vehicle

What to do:
FBT is paid by the employer, not the employee. Some small perks (under $300 per employee per quarter) may be exempt - check the “minor benefit” rule.

🍕 ENTERTAINMENT – Meals, Parties & Fun Stuff

Entertainment expenses cover things like staff lunches, drinks, or events.

Examples:

• Friday drinks with the team
• Christmas party at the office
• Dinner with clients

What to do:
Most entertainment expenses are only 50% tax deductible. But they usually don’t attract FBT- unless they’re more like a personal reward (e.g. a restaurant voucher).
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Final Thoughts

If it feels like money, treat it like PAYE.
If it’s a voucher, check if it’s FBT.
If it’s food or fun, it’s probably entertainment.
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And if you’re not sure - ASK your Bookkeeper! Better safe than sorry.